Wall Street Journal Sep 27, 2001
New York, N.Y.
Bin Laden Family Is Tied To U.S. Group
By Wall Street Journal staff reporters Daniel Golden and
James Bandler in Boston, and Marcus Walker in Hamburg, Germany
If the U.S. boosts defense spending in its quest to stop Osama bin
Laden's alleged terrorist activities, there may be one unexpected
beneficiary: Mr. bin Laden's family.
Among its far-flung business interests, the well-heeled Saudi Arabian
clan -- which says it is estranged from Osama -- is an investor in a
fund established by Carlyle Group, a well-connected Washington merchant
bank specializing in buyouts of defense and aerospace companies.
Through this investment and its ties to Saudi royalty, the bin Laden
family has become acquainted with some of the biggest names in the
Republican Party. In recent years, former President Bush, ex-Secretary
of State James Baker and ex-Secretary of Defense Frank Carlucci have
made the pilgrimage to the bin Laden family's headquarters in Jeddah,
Saudi Arabia. Mr. Bush makes speeches on behalf of Carlyle Group and is
senior adviser to its Asian Partners fund, while Mr. Baker is its senior
counselor. Mr. Carlucci is the group's chairman.
Osama is one of more than 50 children of Mohammed bin Laden, who
built the family's $5 billion business, Saudi Binladin Group, largely
with
construction
contracts from the Saudi government. Osama worked briefly in the
business and is believed to have inherited as much as $50 million from
his father in cash and stock, although he doesn't have access to the
shares, a family spokesman says. Because his Saudi citizenship was
revoked in 1994, Mr. bin Laden is ineligible to own assets in the
kingdom, the spokesman added.
The bin Laden family has long disavowed Osama, and has cooperated
fully with several federal investigations into his activities. The
family business, headed by Osama's half-brother Bakr, epitomizes the
U.S.-Saudi alliance that the suspected terrorist often rails against.
After the 1996 truck bombing in Dhahran, Saudi Arabia, that killed 19
U.S. servicemen, Saudi Binladin Group built military barracks and
airfields for U.S. troops.
But the Federal Bureau of Investigation has issued subpoenas to banks
used by the bin Laden family seeking records of family dealings, a
person familiar with the matter said. This person said the subpoenas
weren't an indication the FBI had found any suspicious behavior by the
family. A family spokesman said he had no knowledge of the subpoenas but
that the family welcomes them and has nothing to hide.
People familiar with the family's finances say the bin Ladens do much
of their banking with National Commercial Bank in Saudi Arabia and with
the London branch of Deutsche Bank AG. They also use Citigroup Inc. and
ABN Amro, the people said.
"If there were ever any company closely connected to the U.S. and its
presence in Saudi Arabia, it's the Saudi Binladin Group," says Charles
Freeman, president of the Middle East Policy Council, a Washington
nonprofit concern that receives tens of thousands of dollars a year from
the bin Laden family. "They're the establishment that Osama's trying to
overthrow."
Mr. Freeman, who served as U.S. ambassador to Saudi Arabia during the
Gulf War, says he has spoken to two of Osama's brothers since hijacked
airplanes rammed the World Trade Center and the Pentagon on Sept. 11.
They told him, he says, that the FBI has been "remarkably sensitive,
tactful and protective" of the family during the current crisis,
recognizing its longstanding friendship with the U.S.
A Carlyle executive said the bin Laden family committed $2 million
through a London investment arm in 1995 in Carlyle Partners II Fund,
which raised $1.3 billion overall. The fund has purchased several
aerospace companies among 29 deals. So far, the family has received $1.3
million back in completed investments and should ultimately realize a
40% annualized rate of return, the Carlyle executive said.
But a foreign financier with ties to the bin Laden family says the
family's overall investment with Carlyle is considerably larger. He
called the $2 million merely an initial contribution. "It's like plowing
a field," this person said. "You seed it once. You plow it, and then you
reseed it again."
The Carlyle executive added that he would think twice before
accepting any future investments by the bin Ladens. "The situation's
changed now," he said. "I don't want to spend my life talking to
reporters."
A U.S. inquiry into bin Laden family business dealings could brush
against some big names associated with the U.S. government. Former
President Bush said through his chief of staff, Jean Becker, that he
recalled only one meeting with the bin Laden family, which took place in
November 1998. Ms. Becker confirmed that there was a second meeting in
January 2000, after being read the ex-president's subsequent thank-you
note. "President Bush does not have a relationship with the bin Laden
family," says Ms. Becker. "He's met them twice."
Mr. Baker visited the bin Laden family in both 1998 and 1999,
according to people close to the family. In the second trip, he traveled
on a family plane. Mr. Baker declined comment, as did Mr. Carlucci, a
past chairman of Nortel Networks Corp., which has partnered with Saudi
Binladin Group on telecommunications ventures.
Former President Carter met with 10 of Osama's brothers early in 2000
on a fund-raising trip for the Carter Center in Atlanta. According to
John Hardman, executive director of the center, the brothers told Mr.
Carter that Osama was completely removed from the family. After Mr.
Carter and his wife followed up with breakfast with Bakr bin Laden in
New York in September 2000, the bin Laden family gave $200,000 to the
center. "We don't have any reason to think there's a connection" between
Osama and the rest of the family, Mr. Hardman says.
During the past several years, the family's close ties to the Saudi
royal family prompted executives and staff from closely held New York
publisher Forbes Inc. to make
two trips to the family headquarters, according to
Forbes Chairman Caspar Weinberger, a former U.S. secretary of defense in
the Reagan administration. "We would call on them to get their view of
the country and what would be of interest to investors."
Mr. Weinberger said no trips to Saudi Arabia were planned. "If we
went," he said, "we may or may not call upon them. I don't think the
sins of the son should be visited on the father or the brother and the
cousins and the aunts."
There is no indication President George W. Bush has met any of the
bin Ladens, but he was indirectly linked to one of them two decades ago.
His longtime friend James W. Bath, who met Mr. Bush when they were both
pilots in the Air National Guard, acted as a Texas business
representative for Osama's older brother, Salem bin Laden, from 1976 to
1988, when Salem died in a plane crash. Mr. Bath brought real-estate
acquisitions and other deals to Salem bin Laden, an ebullient man who
headed the family construction business. Mr. Bath generally received a
5% interest as his fee, and was sometimes listed as a trustee in related
corporate documents. Mr. Bath acknowledged that during the same period
he invested $50,000 in two funds controlled by Mr. Bush but said that
stake was unrelated to his dealings with Mr. bin Laden.
Among the properties that Salem bin Laden bought on Mr. Bath's
recommendation was the Houston Gulf Airport, a lightly used airfield in
League City, Texas, 25 miles east of Houston. But Mr. bin Laden's hope
that it would develop a major overflow airport for Houston never
materialized, in part due to concern over wetlands. Ever since his
death, his estate has sought to sell the airfield -- without success.
Today, it is still on the market.
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